Its not just about medical insurance
It may be the most important aspect, but when you look at mobility as a whole, you have to think about frequent business travellers and commuters, as well as the normal short and long term assignees. This draws you into considerations for business travel, the portability of home insurances and emergency assistance that may be required for remote or dangerous locations.
The UK is hoping that its ‘fit note’ approach will reduce the negative connotations of the old ‘sick note’ approach and get GP’s focusing more on ‘worker return to work’. In the US, President Obama recently passed a bill through the Senate to reform healthcare for at least 40 million Americans who previously had no access to private medical care.
From a global staff mobility perspective, there are some state provided plans that are more internationally mobile than others; you need to be aware of the state provision in any country you may operate in and devise your benefit strategy accordingly. In terms of attracting and retaining a mobile workforce, healthcare is right up there with pension, accommodation and education as a key decision-making factor. It’s rarely a deal breaker, but in all its forms, it can be utilised for attraction, retention and engagement purposes.
It is a fact that with improvements in healthcare over the last 30 years, we are all living longer. That, coupled with the reduction globally in birth rates and shortfalls in retirement income, mean that we will be working into our traditional old age, and health and wellness benefits will be of increasing importance as part of a total reward strategy.
It is in employers’ interests to promote wellness and on top of being a valued employee benefit, in most cases access to private healthcare can get people treated and back to work quicker than state provided schemes, so they make good business sense.
According to a US survey of 455 employers conducted by human resource consulting firm Mercer and sponsored by Kronos ([R]) in late 2008, unplanned absence was costing firms around 9% of their total payroll budget. With this in mind, it is easy to understand why health and wellness benefits remain popular with employees and employers.For longer term absence and permanent and partial disability there is the less well regarded (by employees), but in many ways more important, group life and income protection type benefits. Again these benefits reduce the cost burden of the employer and society and often provide helpful ‘return to work’ strategies as part of the cover. This benefits the insurer, the employer and the employee.
The whole area of health and wellness should be considered as a linked strategy to get the best value from a purchasing perspective and from an employee engagement viewpoint.
Managing global medical insurance arrangements
Having been through the tender process for prospective healthcare providers and a number of healthcare strategy reviews, we know it is important to fully understand the requirements of your specific business before you start either. You may find that it is not always the best known provider that offers the right cover for your business or, more usually, location. For example, during a project to open an office in Miami, we utilised the international arm of a well known and reputable UK healthcare provider. However, after experience on the ground and feedback from our assignees we were forced to review our approach. This decision wasn’t based on the level of cover—which was excellent—it was about the clinic and hospital cover of this provider in this US location. In the end we switched to another well known US provider, which was more cost effective and delivered a better all round service.
That said, if you have scale and size it can become costly to manage bespoke arrangements across multiple locations. With a sizeable group of employees, a single or reduced provider set might provide better value and service, as well as global consistency—a key factor in global mobility programmes. From my own experience I would probably opt for three providers broadly allocated as follows; Europe, Asia Pacific, Middle East and Africa and the Americas, but clearly it depends on the size of company and geographic spread.
A multinational pooling arrangement could be utilised to align benefit levels and service offering across all company locations. Not only do you get more consistency, control and potential cost savings, a pooling arrangement will provide detailed management information (MI). As with Group Life pooling, you can achieve an aggregate level of healthcare cover with the lower cost regions subsidising the higher cost, all with the benefit of localised service provision.
The MI point is an important one and a lower number of providers can achieve this as well. Reducing the number of providers allows the company to identify healthcare hotspots based on claims experience. On investigation this can reveal poor work practices or poor environmental aspects which can be addressed. This should then lead to reduced premiums and, more importantly, reduced levels and cost of absenteeism. Quality of MI provision should be a key selection criteria when choosing a healthcare provider.
Company and policyholder administration is also a vital consideration, and most companies these days have web access for in house scheme owners, HR, and the policyholders themselves, employees, with direct billing across a suitable medical clinic and hospital network. Be sure to ask for references and follow them up to check on the robustness of web tools, claims payment process and other aspects of service. Direct billing is great and mostly the way to go, but ensure they have a network of medical providers in the area of your premises and the main residential areas where your staff may live. The last thing you want is to be managing complaints about coverage or claims payment service; these take up a lot of time and can result in increased cost and reduced staff motivation.
Reducing costs and improving choice
Insurance payments by staff are one way of managing claims experience and keeping costs neutral by passing part of any premium onto the individual policy holder. Using claims data in staff communications around benefits can help them understand the link between the costs of the benefit overall and to them personally, and gets them actively involved in reducing the number of claims per policyholder.
Flexible benefits as an approach can help staff benefit from company buying power to upgrade their standard cover. Additionally, flexible benefits are a cost effective way to extend medical cover to the employee’s family, as are other health benefits such as dental and health screening, which might often be costly to purchase on an individual basis.
Promoting wellness is something that has been on the increase over the last decade and has emerged even stronger from the global financial crisis. The concept is to help improve the work life balance and promote good health in employees, which leads to improved engagement and reduced unplanned absence through illness. When most companies were forced to cut pay reviews and bonuses, wellness programmes were often kept intact. One employer in Manchester in the UK maintained its free access one afternoon per week to shiatsu massage therapy on site. The company’s dedication to this type of benefit regardless of the recession has ensured they have retained high levels of staff engagement despite cutting pay reviews, bonuses and other benefits. The link to massage therapies and de-stressing is well documented and is a very intuitive benefit to provide in heightened stress situations caused by uncertain financial times.
Discounted or free health club membership is also a popular choice among many businesses and in most cases can cost very little or nothing if you are just allowing staff access to discounted membership.
In the US, obesity and smoking are two significant issues that affect the cost of health insurance, costing 50% more and 25% more respectively than non smokers and normal weight employees. A global hotel chain ran a very successful programme to help staff quit smoking and as well as offering support, nicotine replacements and helpline, to do so, allowed staff to declare themselves smoke free and receive discounted healthcare costs. Interestingly, the declaration was voluntary and not substantiated (so based on trust) and still 22% declared the fact that they continued to smoke, and therefore paid the extra premiums.
Similarly they partnered with Weight Watchers to deliver a 13-week programme to help overweight staff get in shape and lose weight. They reimbursed the staff the cost of the programme for hitting their goals and passed on the costs saving in insurance. After the first six months of running the programme, employees combined had lost over 1,400kg of weight between them. Employee engagement scores were improved and the overall cost of healthcare was similarly reduced.
International group risk benefits
As soon as you start to get any kind of critical mass in terms of expatriates, the life, income protection and partial disability benefit provision becomes complex if you try to manage lots of local country plans. It may be possible for the very large conglomerates to do this, although they are most likely use a Multinational Pooling or Captive arrangement.
Alternatively there are international group protection providers that can provide Group Risk benefits to your global expatriate employees through a single policy. This approach improves your administration burden, and more often than not, helps you cover employees across multiple countries, including more high risk areas. This type of plan is mainly aimed at expatriate staff working away from their home country and often does not include cover for employees in China or the US due to local regulatory issues in those countries.
In terms of reducing regulatory and reputational risks, it is important that you have a solution that provides cover for your expatriate workforce.
Global insurers may be able to offer you both local and international cover and, in some cases, a pooling proposition to consider.
As with other insurances, always check your requirements and local legislation in the countries in which you operate.
Take references and check them, this type of insurance generally kicks in after a catastrophe of some type and it is important that the cover you provide as an employer does exactly what you promise.
Price is important in all cases, but the value proposition, in my opinion, outweighs any price bias. Minnesota Life, the fourth largest Group Risk provider in the US, boasts the highest client retention rate and 99% of customers would recommend them as a provider. They are not the cheapest provider in the market, suggesting that value is more important than pure price based decision making.
Summary
As we live and work longer to finance retirement, health and well being benefits will only increase in importance. As with all things ‘state’ these days, budgets are stretched to the limit, which generally means more input is required from employers and individuals. For international mobility, especially into emerging markets, healthcare has always been an important aspect, however of increasing importance are the more preventative aspects around health and wellness which is both socially responsible, relatively cheap and known to improve employee engagement.
With 2010 budgets still stretched, it would be a good time to review your health based insurances and wellness programmes to see whether you still have a good fit and the best value.
Paul Colley
HR Insight & Key Account Manager
Corporate Life and Pensions
Zurich International Life
Paul Arkwright
Publisher
